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[G.R. No. 150848.March 18, 2002]
DOMINGUEZ vs. COSALAN, et al.
FIRST DIVISION
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated 18 MAR 2002.
G.R. No. 150848(Harry D. Dominguez vs. Eladio M. Cosalan, et al.)
This is a petition for review of the decision, promulgated on 20 November 2001, of the Court of Appeals.
Culled from the decision of the appellate court, the facts of the case are as follows:
In 1992, the Department of Public Works and Highways (DPWH) Cordillera Administrative Region awarded Eladio M. Cosalan a road contract on the Halsema Highway. Cosalan engaged the services of Harry D. Dominguez as a sub-contractor with the agreement that the latter would be paid the amount of P5 million after the completion of the work. In the meanwhile, the money would be used to purchase treasury bills under their joint account.
Hence, on 26 February 1992, Cosalan and Dominguez jointly purchased treasury bills from the Land Bank of the Philippines (LandBank) with face value of P1.5 million, to mature on 29 April 1992. The bills were issued under a joint account ("and" account) in their names. On 18 March 1992, they again purchased treasury bills amounting to P1.5 million, again under an "and" account in their names. A third purchase, for P2 million, was made on 21 May 1992, also for an "and" account in the names of Cosalan and Dominguez.
On 04 May 1992, the first placement was renewed and converted into an "and/or" account.The conversion was with the "conforme" of both Cosalan and Dominguez. Later, however, LandBank likewise converted the two other placements to an "and/or" account without the conformity of Cosalan.
Dominguez used the accounts as collaterals for his loans with LandBank. He failed to pay his obligations and the bank foreclosed the accounts. Dominguez thereafter abandoned the roadwork project.
On 01 January 1993, Cosalan filed a complaint for "Sum of Money and Damages" against LandBank, alleging that through its gross negligence and bad faith, Dominguez was able to abscond with the P5 million worth of treasury bills and the interests thereon. LandBank denied negligence on its part. It likewise filed a third party complaint against Dominguez.
In a decision, dated 22 August 1996, the Regional Trial Court of Baguio City, Branch 6, dismissed the complaint, the third party complaint, and the counterclaims of LandBank and Dominguez.
Cosalan appealed to the Court of Appeals. In the now questioned decision, the appellate court reversed and set aside the trial court's decision and held, as follows:
WHEREFORE, premises considered, the judgment appealed from is hereby REVERSED and SET ASIDE and a new one is hereby rendered:
(1)�� Directing Land Bank of the Philippines to pay Eladio M. Cosalan the following:
a.The amounts of P1.5 Million and P2.0 Million representing the 2nd and 3rd placements, respectively;
b.���� Interests on the above placements on the agreed rate starting from the date of the supposed renewal until fully paid;
c.���� Moral damages in the amount of P50,000.00; and
d.���� Attorney's.fees in the amount of P50,000.00.
(2)�� Holding Harry Dominguez liable to reimburse or indemnify Land Bank of the Philippines for the above payments made to Eladio M. Cosalan.
SO ORDERED.
Hence, the present recourse by Dominguez, raising the following issues:
The respondent Court of Appeals erred in its appreciation of the facts of the case.
The respondent Court of Appeals erred in holding Harry Dominguez liable to reimburse the payments made by the Land Bank of the Philippines to Eladio Cosalan.
The petition lacks merit.
The Court of Appeals did not err in its appreciation of the facts of the case. It correctly stated that LandBank failed to observe the precautions and measures required of it as a banking institution. While it may be true that the first placement was converted to an "and account" with the conformity of Cosalan, it does not necessarily follow that Cosalan likewise agreed to conversion of the other accounts. LandBank should have made inquiries from Cosalan considering that the amounts involved were substantial and further considering that Dominguez used the accounts as collaterals for his personal loans to the bank. The testimonies of bank officials Erlinda Velasquez and Jaime Cruz, Jr., both quoted in the appellate court's decision, [1] cralaw would also disclose that LandBank did not follow the usual bank procedures with respect to the conversion of the two other accounts. Instead, it relied on the representations of Dominguez that he really was the only owner of the money. It bears stressing that banks, being greatly affected with public interest, are expected to exercise a degree of diligence in the handling of its affairs higher than that expected of an ordinary business firm. [2] cralaw It is under obligation to treat the accounts of its depositors with meticulous care, whether such accounts consist only of a few hundred or millions of pesos. [3] cralaw Land Bank failed to exercise the diligence required of it under the circumstances.
Anent the second issue, petitioner argues that if LandBank was indeed negligent, it only has itself to blame and it must suffer for the consequences of its own negligence. To sustain the contention would result to undue enrichment on the part of Dominguez who appeared to have acted in bad faith in the two transactions. LandBank acted on the basis of the misrepresentations of Dominguez who greatly benefited by the conversion of the two other placements to "and/or" accounts. The Court of Appeals correctly stated that Dominguez should return what he unduly and inappropriately received from the bank and that he should be held liable and responsible for the consequences of his fraudulent and wanton acts. [4] cralaw
The petition is hereby DENIED, no reversible error having been committed by the Court of Appeals in its decision sought to be reversed.PUNO, J., is on official leave.
Very truly yours,
(Sgd.) VIRGINIA ANCHETA-SORIANO
Clerk of Court
Endnotes:
[1] cralaw Rollo, at 37-44.
[2] cralaw Ibaan Rural Bank, Inc. vs. Court of Appeals, 321 SCRA 88 (1999).
[3] cralaw Philippine National Bank vs. Court of Appeals, 315 SCRA 309 (1999).
[4] cralaw Rollo, at 46.
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